• Houston Court of Appeals Re-Affirms Texas Rule Limiting Agent Duties
  • December 7, 2017
  • In an unpublished opinion, Houston’s First Court of Appeals recently upheld and re-affirmed the long-standing Texas rule limiting an insurance agent’s legal duties to (1) using reasonable diligence in attempting to place the requested insurance and (2) informing the client promptly if unable to do so. In Ruch v. Ted W. Allen & Assoc., Inc., 01-15-01081-CV, 2017 WL 4682031 (Tex. App.—Houston [1st Dist.] Oct. 19, 2017, no pet. h.), a condominium HOA sued both its property manager and its insurance agent, arguing they had not acquired a sufficient amount of insurance for the property. The property had $5 million in property insurance, and after suffering a major fire loss, the property was significantly underinsured.

    The insurance agent moved for and won summary judgment on the ground that it had no contractual relationship with the insured, nor did it owe any duty imposed by law to affirmatively recommend insurance to the insured or to obtain more or different insurance than the insured requested. In a brief opinion relying on the landmark Supreme Court of Texas opinion on this issue, May v. United Servs. Ass'n of Am., 844 S.W.2d 666, 669 (Tex. 1992), the court of appeals affirmed summary judgment in favor of the agent. The property manager also won summary judgment on different grounds and that was also affirmed.

    Editor’s Note: While this opinion does not break new legal ground and is not particularly significant on its own (the court did not even find it worth publishing), it takes on greater significance in light of the coming wave of Hurricane Harvey lawsuits, which will likely include a large number of claims against agents for failure to obtain or recommend flood insurance. It will undoubtedly be helpful for agents and their attorneys to have this very recent Houston opinion confirming the continued relevance and vitality of May in their pockets.